Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing of a lawsuit against brothers Kevin and Keelan Harris and their companies, Complete Developments LLC (CDL) and Investment International Inc. (I3), all of Warren, Ohio, Karen Starr of Barrie, Ontario, and Patrick Cole and Global Strategic Marketing Inc. (GSM), both of Mississauga, Ontario. The CFTC’s civil complaint, filed on October 7, 2010, in the U.S. District Court for the Northern District of Ohio, charges the defendants with fraud and misappropriation in connection with the operation of a multi-million dollar foreign currency (forex) Ponzi scheme.
The complaint alleges that, from about November 2006 until October 2008, CDL and I3 fraudulently solicited and accepted millions of dollars from hundreds of individuals to open “professionally managed” accounts for the purported purpose of trading off-exchange forex contracts. However, rather than trading forex on their customers’ behalf, CDL and I3 allegedly operated as a Ponzi scheme, using new customers’ money to pay purported interest to existing customers, and misappropriated customer funds, the complaint charges.
Specifically, according to the complaint, CDL, I3, CDL’s president and CEO Kevin Harris, I3 Director Starr and GSM, CDL’s exclusive marketing agent, allegedly made false representations in soliciting customers, including that 1) they would trade forex on customers’ behalf, 2) customers would receive guaranteed monthly interest of between 5 percent and 12 percent on their investments, 3) at least 80 percent of the funds invested would be returned to customers and 4) customer funds would be segregated from CDL and I3’s corporate funds. The complaint also charges that the same defendants concealed from customers that defendants Kevin and Keelan Harris and Starr had been previously convicted of multiple offenses, including fraud. GSM’s President Cole, as a controlling person of GSM, is liable for knowingly inducing GSM’s violations, according to the compliant.
The complaint also charges CDL, I3 and Kevin and Keelan Harris with misappropriation by transferring customer funds to Kevin Harris’ and Starr’s joint personal trading account and using customer funds to pay personal expenses, including mortgages, car leases, cell phone bills, airline tickets, hotel rooms and rental cars.
Four corporations named as relief defendants
The CFTC complaint names as relief defendants Majestic Enterprises Collision Repair, Inc., an Ohio corporation, UCAN Overseas Corporation S.A., a Panamanian company, and RAK Palace Rent-A-Car, a company believed to be incorporated in the United Arab Emirates. The relief defendants allegedly received customer funds as a result of the defendants’ fraudulent conduct and have no legitimate entitlement to those funds.
In its continuing litigation, the CFTC seeks disgorgement of ill-gotten gains from defendants and the relief defendants, restitution to defrauded customers, civil monetary penalties, permanent injunctions against further violations of federal commodities laws and trading and registration bans.
The CFTC thanks the Federal Bureau of Investigation, the Internal Revenue Service’s Criminal Investigation Division, the U.S. Immigration and Customs Enforcement’s Office of Investigations and the U.S. Attorney’s Office for the Northern District of Ohio for their assistance. The CFTC also appreciates the assistance of the Ontario Securities Commission and the Ohio Department of Commerce, Division of Securities.
The CFTC Division of Enforcement staff members responsible for this case are Karin N. Roth, Linda Y. Peng, Michael C. McLaughlin, David W. MacGregor, Lenel Hickson, Jr. and Vincent A. McGonagle. The Division of Enforcement was assisted by Robert Laverty of the CFTC’s Division of Clearing & Intermediary Oversight.